Libor-Manipulation Trial Ends in Convictions

MANHATTAN – A federal jury convicted two bankers from the London office of Rabobank on Thursday of manipulating benchmark interest rates tied to trillion-dollar contracts. Short for the London Interbank Offered Rate, Libor is the rate banks charge one another for short-term loans necessary to carry on their business. More than $300 trillion in financial derivatives are tied to Libor rates. The verdict against Anthony Allen, 44, of Hertsfordshire, England, and Anthony Conti, 46, of Essex, England, marks five Libor-linked convictions of former Rabobank employees. The bank’s full name is Cooperatieve Centrale Raiffeisen-Boerenleenbank. After a four-week trial, the jury convicted Allen and Conti of conspiracy to commit wire and bank fraud and substantive counts of wire fraud. Prosecutors had urged jurors at the start of trial not to be “intimidated” by unfamiliar financial jargon, ubiquitous in a case where interest-rate estimates by Rabobank were supposed to reflect the rate that the bank believed it would be charged if borrowing from other banks. Rabobank was one of 16 banks to submit its interest-rate calculation to the British Bankers’ Association, which then calculated the Libor average based on 10 currencies at 15 maturities, ranging from overnight to one year. Rabobank had an interest, however, in various derivatives contracts that the relevant Libor rates directly affected on a certain dates. Moving Libor in certain directions could either directly benefit Rabobank and its employees, or cost them money, prosecutors said. Along with Paul Robson, who previously pleaded guilty to a conspiracy charge, Allen and Conti each determined Rabobank’s Libor submissions on various occasions. Allen served as global head of liquidity and finance at Rabobank. As manager of the company’s money-market desk in London, Allen “oversaw a system in which Rabobank employees who traded in these Libor-linked derivative products influenced the employees who submitted Rabobank’s LIBOR contributions to the BBA,” according to a statement from the Justice Department. “These traders asked Allen, Conti, Robson and others to submit LIBOR contributions that would benefit the traders’ or the banks’ trading positions,” prosecutors say. Allen and Conti face sentencing on March 10, 2016. Lee Stewart and Takayuki Yagami joined Robson in previously pleaded guilty to a conspiracy count. “Two other former Rabobank employees, Tetsuya Motomura, 42, of Tokyo, and Paul Thompson, 48, of Dalkeith, Australia, have also been charged,” according to a statement from the Justice Department. Rabobank entered into a deferred prosecution agreement with the government on Oct. 29, 2013, agreeing to pay a $325 million penalty.